The Thackaringa project is planning to mine ore from three surface deposits. The host rock (silica and feldspars) contains approximately 20% sulphides (mainly pyrite), with cobalt at 800-1000 ppm. This announcement presents the most recent results for processing of the sulphide concentrate to extract cobalt.

Diamond drill core samples were collected in late 2016. Approximately 820 kg of the ore, representing Railway Hill and Pyrite Hill deposits, was composited in August 2017, and is being used to test the preferred process for the Pre-Feasibility Study (PFS). The grade of the composite used in the testwork is only 607 ppm cobalt, which is lower than the average grade of the resource estimate. The results should therefore be considered as establishing a baseline set of data, with higher grade ore giving better recoveries and lower capital and operating costs compared to the baseline.

The PFS test work program is designed to deliver 'reliable and repeatable' results at a scale 10-50 times larger than the tests used in the Scoping Study (July 12 2017), where the 'proof-of-concept' was determined. The results will be used to conducted engineering studies and cost estimates for the PFS.

The PFS is examining the processing path shown below:

There are four stages to the metallurgical test work (post mining):

A. Concentrate: Preparation of a sulphide concentrate from the ore

B. Calcine: Calcination (thermal treatment) of the concentrate

C. Leaching: Leaching of the calcine

D. Product Recovery: purification of leach liquor, followed by crystallisation of cobalt sulphate

Processing - Concentrate - summary of results

Ore was processed by crushing to p100 @ 1.2 mm and passed through a gravity spiral circuit. The tails were screened, with the fines subjected to froth flotation. The gravity and flotation concentrates were combined into a single concentrate. Approximately 144 kg of concentrate was produced from the 820 kg of ore composite, with a recovery of 92% of the cobalt to concentrate.

Further work examining finer grind sizing was then conducted. Results indicated that varying the particle size down to 425um permitted 94% recovery of cobalt to concentrate.

Processing - Calcine and Leach

A total of 90 kg of gravity-float concentrate has been calcined by ALS Metallurgy in Perth, producing approximately 70 kg of calcine. Process conditions have been varied to determine the optimum parameters for selection as design criteria set-point for the PFS engineering design study. Importantly, the target conversion of >95% of the pyrite into pyrrhotite has been repeatedly achieved, with no loss of cobalt to the sulphur collected from the off-gas. Further, the typical removal of sulphur from the head feed has increased from 35% (27 Dec 2017) to 40% in recent tests. Potential equipment vendors are presently involved with the PFS engineering study. Preliminary marketing studies have now commenced for the elemental sulphur product.

A total of 56 leach tests have been completed on the calcine by ALS Metallurgy Burnie, systematically varying temperature, liquor composition, solids density, residence time, particle size, and oxygen uptake. The optimum conditions have achieved repeatable cobalt extractions of 95-98% with the average being 96%. The average data from 5 runs (~ 1 kg per test) is shown in link below.

Equipment vendor packages for the autoclave are now being prepared as part of the PFS study.

The key outcomes to date are:

- Calcining the gravity concentrate typically removes ~40% of the sulphur from the pyrite.

- Elemental sulphur condensed from the gas phases averaged 97.5% sulphur with 1.5% silica as the main contaminant. Improved engineering design of the off-gas handling is expected to improve the quality of the sulphur in future testwork.

- There are no losses of cobalt to the gas phases it the thermal treatment step.

The leach liquors were collected, and have been advanced to the product recovery stages, where cobalt sulphate will be produced. Testwork is ongoing, with the focus being on purifying the solutions to remove iron, copper, zinc, nickel, manganese, and calcium, which would otherwise contaminant the final cobalt sulphate product.

Cobalt Blue's PFS Manager, Dr Andrew Tong said:

"The PFS testwork has successfully achieved high recoveries of cobalt from ore to leach solution (total recovery of 88% cobalt from ore to leach solution). The key process steps have been validated: concentration, calcining, and leaching. The remaining focus of testwork is to produce high purity cobalt sulphate from the leach liquor. The high recoveries augur well for the economic evaluation of the project, which will be completed in the PFS."

PFS - Conceptual Plant Description

Conceptual schematics of the commercial plant circuits are shown in the following graphics. The aim is to treat 5 MTPA of ore and produce 1 MTPA of concentrate. The concentrate is then thermally treated, with removal of ~ 40% of the sulphur as elemental sulphur. The resulting calcine (~0.8 MTPA) is then treated in the leach circuit to extract cobalt. Cobalt Blue is targeting a total recovery of cobalt from ore to product of ~85-90%.

PFS test work - looking forward

Overall COB remains delighted with test work results to date, and is looking forward to completing the program in Q1 2018. Further progress updates on the testwork will be the subject of separate market announcements. COB remains focused on proving up the processing and economics of our unique ore. Our goal is to prove a long life mining operation capable of operating at cobalt cycle troughs.

A schedule is shown in link below for the first 820 kg ore sample. The second 500-600 kg sample will be processed during Q1 2018.

Thackaringa - Mine to Battery Strategy

Our strategy is to produce cobalt sulphate which can be used directly in the manufacture of batteries. High purity cobalt sulphate commands a premium to LME cobalt metal. Cobalt Blue is aiming to develop an integrated mine/refinery model, and generate ~4000 t of contained cobalt per year.

Cobalt Sulphate Samples Produced - Commercial Meetings to Follow

Initial cobalt sulphate product is being produced (see image in link below) from Thackaringa ore. Following this milestone, and using these samples for customer evaluation, COB management will be meeting with key global battery industry participants during March. Investors can expect updates as they arise.

Thackaringa Project Indicative timetable

Results to date continue to justify proceeding further along the pathway towards commercial development of the Thackaringa cobalt project. The overall company timeline is shown in link below.

The Thackaringa district map below shows the proximity to Broken Hill, the supporting rail and road network, as well as the availability of both power and water utilities to support future production.

Cobalt Blue Holdings Ltd (ASX:COB) is an exploration and project development company focussed on green energy technology and strategic development to upgrade its mineral resource at the Thackaringa Cobalt Project in New South Wales from Inferred to Indicated status. This strategic metal is in strong demand for new generation batteries, particularly lithium-ion batteries now being widely used in clean energy systems.

Potential to extend the Mineral Resource at Pyrite Hill, Big Hill, Railway and the other prospects is high. Numerous other prospects within COB’s tenement package are at an early stage and under-explored.